Hawkish Tito

On the 11th of April this year I put together a post around the interest rate outlook.  In the post (made one day after the latest interest rate hike) I noted that based on the countries historical reaction to the interest rate hikes I anticipated a further two hikes, each of 50 basis points. Looking this morning at comments made by the Governor this morning, it would appear that we are due to see another hike at the next monetary policy meeting.

I believe that this and one other before the end of the year, are inevitable.  The stated objective of the reserve bank is to keep inflation within the targeted range of 3-6%. 

My prediction would be that if you make it through the next 12 months you are going to be able to reap the benefits of prudent use of your money now.  Look carefully at your debt, make some considered choices about what you really need as opposed  to what you really want.

Take out all the small items that are just consuming your cash and invest in items that bring a return.  Having said this remember that the house you are staying is not an investment.  It may be an asset against which you can borrow, but unless you are planning to sell and use the profit, it is simply the house that you are living in.

Focus on changing you mind set and you will be able to make it through, focus on “I want” and you are going to go to the wire.

Let’s keep it money wise out there. (the couch economist)